A Spiff is a temporary bonus that is given as extra reward for creating quick results. Unlike regular commission, spiffs are short-lived and targeted, typically on a specific product or for a short promotional period.
A seller receives an 8% commission on all sales. The company will sell a new product and is offering a spiff of 1,000 kronor per unit sold in the first month.
If the seller closes 5 orders, the calculation will be:
(5 × 1,600) + (5 × 1,000) = 8,000 + 5,000 = 13,000 NOK in total
Spiffs provide a cash, quick reward that motivates salespeople to focus on what the company wants to highlight. This could be getting a new product out on the market, closing deals before the end of the quarter, or creating extra activity during a quiet period.
In short, a spiff is a turbo button in the incentive model: quick bonus, quick motivation and quick results.